Interim Report January June 2017

Transcription

1 Q2 Interim Report January June 1 April e * Lending to the public rose 14% to SEK 22,311 million Operating income increased 8% to SEK 766 million Operating profit increased by 10% to SEK 340 million Earnings per share rose 10% to SEK 1.32 C/I before credit losses (excl. Insurance) was 42.1% (43.2%) The credit loss ratio was 1.8% (1.9%) 1 January e * Lending to the public rose 14% to SEK 22,311 million Operating income increased 9% to SEK 1,514 million Operating profit increased by 18% to SEK 662 million Earnings per share rose 17% to SEK 2.55 C/I before credit losses (excl. Insurance) was 42.4% (45.3%) The credit loss ratio was 1.8% (2.0%) It is gratifying that we can end another strong quarter the best in the Group s history. Growth in lending in the second quarter of was 14 per cent, increasing to SEK 22.3 billion. Growth was driven by both banking segments and by all geographic markets. ABOUT RESURS HOLDING Kenneth Nilsson, CEO Resurs Holding AB Resurs Holding (Resurs), which operates through the subsidiaries Resurs Bank and Solid Försäkring, is the leader in retail finance in the Nordic region, offering payment solutions, consumer loans and niche insurance products. Since its start in 1977, Resurs Bank has established itself as a leading partner for sales-driven payment and loyalty solutions in retail and e-commerce, and Resurs has thus built a customer base of approximately 5.5 million private customers in the Nordics. Resurs Bank has had a banking licence since 2001 and is under the supervision of the Swedish Financial Supervisory Authority. The Resurs Group operates in Sweden, Denmark, Norway and Finland. At the end of the second quarter of, the Group had 742 employees and a loan portfolio of SEK 22.3 billion. Resurs is listed on Nasdaq Stockholm, Large Cap. *Certain performance measures provided in this section have not been prepared in accordance with IFRS. Definitions of performance measures are provided on page 30. The reasons for using alternative performance measures and reconciliation against information in the financial statements are provided on the website under Financial information. The figures in parentheses refer to e in terms of financial position, and to the year-earlier period in terms of profit/loss items.

2 RESURS HOLDING AB INTERIM REPORT JAN JUN STATEMENT BY THE CEO RECORD-BREAKING QUARTER WITH CONTINUED PROFITABLE GROWTH AND FASTER PACE OF DIGITISATION It is gratifying that we can end another strong quarter the best in the Group s history. The growth in lending in the second quarter of was 14 per cent, increasing to SEK 22.3 billion. Growth was driven by both banking segments and by all geographic markets. The insurance operations also continued their positive performance. Profit after tax excluding nonrecurring costs increased 5 per cent to SEK 263 million, driven by sustained higher business volumes and strong control over both costs and credit losses. Our performance is continuing to surpass target expectations. Continued fast pace of digitisation The quarter held many positive elements. In particular, we maintained a fast pace in the development of digital services and products and we are increasing our share of e-commerce customers. Resurs is one of the most digitised niche banks in the Nordic region. We offer traditional e-commerce with check-out. We were also the first in the Nordic region to offer a converged wallet an app for mobile payment in both traditional stores and e- commerce (Loyo Pay), which still only a few companies offer. We also launched Loyo Pay in Norway during the quarter and the roll-out of the service will continue with Finland later in the autumn. We are continuing to focus intently on innovation, which also led to increased investments in IT. SEVERAL NEW PARTNERS IN THE SECOND QUARTER LENDING TO THE PUBLIC 22,311 MSEK LENDINGGROWTH +14% Digitisation boosts sales for our retail finance partners We are the market leader in retail finance and have digitised the entire credit application process for the Swedish, Danish and Norwegian market, with Finland soon to follow. We are also continuing to evaluate and develop automated processes (robotics) in our business support, and we are analysing other opportunities for digitising the operations as well. We are continuing to launch digital services for the retail sector and during the quarter launched a service where customers themselves can use their mobile to apply for a loyalty card with credit for that retail chain. Everything automatically arranged and customers can go straight to the till and check out. Several new exciting customer agreements We received additional confirmation during the quarter that our products, solutions and service are appreciated in the market when we secured new, attractive retail finance partners, including Bad och Värme with about 90 sanitary and heating stores in Sweden. We also won back Hylte Lantmän with an extended agreement for the Norwegian market. Just like the first quarter of, we initiated collaborations with a number of e-commerce partners, for example, South East and Golfhandelen.no. Overall, this means that we are growing faster than the market and we are thus continuing to capture market shares. At the same time, we are broadening the market and creating brand new growth opportunities by offering new solutions that we will continue to focus on over the next few quarters. Kenneth Nilsson, CEO Resurs Holding AB 2

3 RESURS HOLDING AB INTERIM REPORT JAN JUN PERFORMANCE MEASURES SEKm unless otherwise specified Apr Jun Change Change Jan Dec Operating income % 1,514 1,386 9% 2,797 Operating profit % % 1,140 Net profit for the period % % 905 Net profit for the period, adjusted for nonrecurring costs* % % 966 Earnings per share, SEK % % 4.52 Earnings per share, adjusted for nonrecurring costs, SEK* % % 4.83 C/I before credit losses, % C/I before credit losses (excl. Insurance), %* Common Equity Tier 1 ratio, % Total capital ratio, % Lending to the public 22,311 19,596 14% 22,311 19,596 14% 21,204 NIM, %* NBI margin, %* Credit loss ratio, %* Return on equity excl. intangible assets (RoTE), %* Return on equity excl. intangible assets, adjusted for nonrecurring costs (RoTE), %* * Some performance measures used by management and analysts to assess the Group s performance are not prepared in accordance with International Financial Reporting Standards (IFRS). Management believes that these performance measures make it easier for investors to analyse the Group s performance. Definitions of performance measures are provided on page 30. The reasons for using alternative performance measures and reconciliation against information in the financial statements are provided on the website under Financial information. GROUP RESULTS* SECOND QUARTER, APRIL JUNE Operating income The Group s operating income increased by 8 per cent to SEK 766 million (710). The NBI margin for the banking operations was 13.1 per cent (14.0 per cent), which is within the Group s established mid-term financial target. The decline compared with the year earlier quarter was due to higher volumes with a slightly lower NBI margin, but higher profitability in total. Net interest income increased by 9 per cent to SEK 605 million (552), with interest income amounting to SEK 672 million (608) and interest expense to SEK -67 (-56). Fee & commission income amounted to SEK 58 million (55) and fee & commission expense to SEK -18 million (-12), resulting in a total net commission for the banking operations of SEK 41 million (43). NET INTEREST INCOME + 9% 3

4 RESURS HOLDING AB INTERIM REPORT JAN JUN Premiums earned, net, in the insurance operations amounted to SEK 192 million (246), while claim costs fell to SEK -57 million (-95), which is recognised in the item insurance compensation, net. The decline was the result of the discontinuation of the travelinsurance programme in the UK in. Excluding the unprofitable UK operations, premiums earned, net increased. Fee & commission expense in the insurance operations amounted to SEK -61 million (-88). In total, net insurance income increased by 18 per cent to SEK 74 million (63). Net income from financial transactions was SEK 4 million (2). The change related to value fluctuations in investments in interest-bearing securities and shares and exchange-rate differences in assets, liabilities and derivatives in foreign currencies. Other operating income amounted to SEK 42 million (51), primarily comprising remuneration from lending operations. A part payment of SEK 8 million was received for VISA shares in the year-earlier period. Operating expenses The Group s expenses before credit losses totalled SEK -328 million (-310). The yearearlier quarter included a nonrecurring cost of SEK -14 million for the IPO. Year-on-year expenses increased in absolute terms as a result of intensified marketing activities and higher investments in IT. Viewed in relation to the operations income, the cost level (excluding Insurance) continued to decline and amounted to 42.1 per cent (43.2 per cent). Credit losses totalled SEK -98 million (-91) and the credit loss ratio was 1.8 per cent (1.9 per cent) due to sustained growth in the loan portfolio and improved credit quality. Profit Operating profit increased by 10 per cent to SEK 340 million (309). Net profit for the quarter amounted to SEK 263 million (240). Tax expense for the quarter amounted to SEK -77 million (-69). FIRST HALF OF, JANUARY JUNE Operating income and expenses The Group s operating income increased by 9 per cent to SEK 1,514 million (1,386), primarily due to growth in lending. The NBI margin for the banking operations was 13.1 per cent (13.8 per cent), which is within the Group s mid-term financial target. The decline was due to higher volumes with a slightly lower NBI margin, but higher profitability in total. Net interest income rose by 10 per cent to SEK 1,180 million (1,074), with interest income amounting to SEK 1,308 million (1,187) and interest expense to SEK -128 million (-113). Fee & commission income amounted to SEK 131 million (115) and fee & commission expense to SEK -31 million (-25). This resulted in a total net commission for the banking operations of SEK 100 million (90), up 11 per cent. C/I RATIO (excl. Insurance) 42.1% OPERATING PROFIT Q2 +10% The Group s expenses before credit losses totalled SEK -652 million (-636). A nonrecurring cost of SEK -34 million for the IPO impacted the preceding year. Viewed in relation to the operations income, the cost level (excluding Insurance) continued to decline and amounted to 42.4 per cent (45.3 per cent). Credit losses totalled SEK -201 million (-188) and the credit loss ratio was 1.8 per cent (2.0 per cent) due to sustained growth in the loan portfolio and improved credit quality. Profit Operating profit increased by 18 per cent to SEK 662 million (562). Net profit for the period amounted to SEK 510 million (436). Tax expense for the period amounted to SEK -151 million (-126). 4

5 RESURS HOLDING AB INTERIM REPORT JAN JUN FINANCIAL POSITION AT 30 JUNE At e, the Group s financial position was strong, with a capital base of SEK 3,754 million (3,220) in the consolidated situation, comprising the Parent Company Resurs Holding AB, and the Resurs Bank AB Group. The total capital ratio was 15.3 per cent (14.4 per cent) and the Common Equity Tier 1 ratio was 13.3 per cent (13.3 per cent). At e, lending to the public totalled SEK 22,311 million (19,596), representing a 14 per cent increase, and a 13 per cent increase excluding currency effects. The increase was driven by both banking segments and by all geographic markets. In addition to capital from shareholders, the financing of the operations comprises deposits from the public, the bonds issued under the MTN programme and the securitisation of loan receivables (ABS financing). The Group pursues a strategy of actively working with various sources of financing in order to use the most suitable source of financing at any time and to create highly diversified financing in the long term. Deposits from the public at e fell 2 per cent to SEK 17,981 million (18,388), which is in line with the strategy of highly diversified financing. Financing through issued securities totalled SEK 4,698 million (2,203). Liquidity remained healthy and the liquidity coverage ratio (LCR) was 183 per cent (149 per cent) in the consolidated situation. There has been a minimum statutory LCR ratio of 80 per cent since that will increase to 100 per cent from Lending to credit institutions at e amounted to SEK 3,019 million (3,401). Holdings of treasury and other bills eligible for refinancing, as well as bonds and other interestbearing securities, totalled SEK 2,793 million (2,540). Cash flow from operating activities amounted to SEK -1,298 million (1,007) for the first six months of the year. Cash flow from deposits amounted to SEK -405 million (1,748) and the net change in investment assets totalled SEK -52 million (-66). Cash flow from investing activities for the period totalled SEK -31 million (-12) and cash flow from financing activities was SEK 1,097 million (22). Bonds totalling SEK 1,700 million have been issued under Resurs Bank s MTN programme since the start of the year, of which SEK 300 million pertained to subordinated Tier 2 bonds. Resurs Holding paid a dividend of SEK 600 million during the period. Intangible assets amounted to SEK 1,848 million (1,839), mainly comprising the goodwill that arose in the acquisition of ya Bank in *Certain performance measures provided in this section have not been prepared in accordance with IFRS. Definitions of performance measures are provided on page 30. The reasons for using alternative performance measures and reconciliation against information in the financial statements are provided on the website under Financial information. TOTAL CAPITAL RATIO 15.3% 19.6 LENDING TO THE PUBLIC 22.3 Q2-16 Q2-17 Trend in lending to the public in SEK billion. LIQUIDITY COVERAGE RATIO 183% 5

6 RESURS HOLDING AB INTERIM REPORT JAN JUN SEGMENT REPORTING RESURS HOLDING S THREE SEGMENTS Resurs Holding has divided its operations into three business segments, based on the products and services offered: Payment Solutions, Consumer Loans and Insurance Payment Solutions delivers finance, payment and loyalty solutions that drive retail sales, as well as credit cards to the public. Consumer Loans focuses primarily on lending to consumers. Insurance includes the wholly owned subsidiary Solid Försäkring, active within consumer insurance. In the first half of, Payment Solutions accounted for 41 per cent of the Group s operating income, while Consumer Loans and Insurance accounted for 53 and 6 per cent, respectively. PERCENTAGE OF OPERATING INCOME JAN- JUN Payment Solutions 41% Consumer Loans 53% Insurance 6% 6

7 RESURS HOLDING AB INTERIM REPORT JAN JUN PAYMENT SOLUTIONS Strong quarter high activity in digital offering SECOND QUARTER, APRIL JUNE Payment Solutions reported a strong performance for the quarter. Retail finance noted a positive trend and record-breaking sales in a couple of markets. Credit cards also displayed strong growth. Activity in the market was generally high and the segment was successful, having secured several new retail finance partners, such as Bad och Värme with about 90 sanitary and heating stores in Sweden. The segment also won back Hylte Lantmän with an extended agreement for the Norwegian market. During the quarter, the segment also initiated collaborations with a number of new e-commerce partners, for example, with South East and Golfhandelen.no. The segment launched a series of innovations during the quarter, such as a service whereby customers themselves can use their mobile to apply for a loyalty card with credit for that retail chain. Customers order a credit application form via text message. Customers sign the form using Mobile BankID and receive a response immediately, and can then go to the till and pay. This service is quick, simple and secure since customers do everything themselves and do not need to wait for assistance in the store. The store saves time and can focus on sales instead of administering credit applications. In-store digital credit applications, digital signing, has already been launched in Sweden and Denmark and was launched in several stores in Norway during the quarter. The aim is to launch digital signing in Finland in the near future. The Loyo Pay app has now been launched in Sweden and in Norway. The aim is to launch the app in Finland during the year and then in Denmark. Operating income increased by 7 per cent to SEK 315 million (295) due to higher business volumes from both new and existing retail finance partners. Operating income less credit losses also rose by 7 per cent to SEK 281 million (263). The NBI margin was 14.4 per cent (14.5 per cent). ABOUT PAYMENT SOLUTIONS The Payment Solutions segment is comprised of retail finance and credit cards. Within retail finance, Resurs is the leading partner for sales-driving finance, payment and loyalty solutions in the Nordic region. Credit Cards comprises Resurs s proprietary credit cards (of which Supreme Card is the best known), and co-branded credit cards for retail finance partners. Resurs currently has about 280,000 credit card customers in the Nordic market. LENDING TO THE PUBLIC Credit losses in absolute terms followed the growth in lending and were stable year-onyear, measured as a percentage of lending volumes. FIRST HALF OF, JANUARY JUNE At e, lending to the public rose by 7 per cent to SEK 8,816 million (8,275), driven by higher sales and new lending in all markets Operating income increased by 6 per cent to SEK 622 million (584) due to higher business volumes from both new and existing retail finance partners. Operating income less credit losses rose by 9 per cent to SEK 553 million (507). The NBI margin amounted to 14.1 per cent (14.4 per cent), with the decline attributable to higher volumes in new retail finance partnerships with a slightly lower NBI margin, but higher profitability in total. Credit losses, both in absolute terms and as a percentage of lending volumes, were lower year-on-year due to improvements in the credit quality of the portfolio. Q2-16 Q2-17 Trend in lending to the public in SEK billion. PERFORMANCE MEASURES - PAYMENT SOLUTIONS SEKm Apr Jun Change Change Jan Dec Lending to the public at end of the period 8,816 8,275 7% 8,816 8,275 7% 8,786 Operating income % % 1,185 Operating income less credit losses % % 1,026 NBI margin, % Credit loss ratio, %

8 RESURS HOLDING AB INTERIM REPORT JAN JUN CONSUMER LOANS New record-breaking quarter with strong increase in sales in own channels SECOND QUARTER, APRIL JUNE Consumer Loans reported a favourable increase in sales and posted its strongest quarter to date. The performance in Sweden remained strong and sales in own channels to our own customer base increased significantly. The trend in Norway remained positive despite many new competitors. In Finland, sales increased sharply, primarily towards the end of the quarter. Meaning after the launch of the new technical platform, which creates a simpler and more automated application process for customers and increases opportunities for analysing and enhancing the efficiency of credit lending. It is gratifying that the platform has already started to generate effects. In Denmark, the segment directed an offering to new customers outside our database for the first time in the past quarter. The initial results were very positive. Customer satisfaction continued to improve during the quarter. The percentage of customers awarding us a maximum score of ten (on a scale of one to ten) rose markedly to 32 per cent. The segment believes that the launch of My Credit Rating on the website will further boost customer satisfaction. My Credit Rating is a unique function in Sweden where customers can log in to the website to see the parameters used by Resurs to assess their credit score and see what their rating is. Operating income increased by 8 per cent in the quarter to SEK 408 million (378). Operating income less credit losses also rose by 8 per cent to SEK 344 million (319). The NBI margin was 12.3 per cent (13.7 per cent). The decline was primarily due to ya Bank and the Swedish portfolio reporting the largest volume of lending growth, which both have slightly lower average interest rates than portfolios in other markets. Credit losses in absolute terms were slightly higher year-on-year as a direct result of higher lending volumes. Measured as a percentage of lending volumes, credit losses were lower year-on-year at 1.9 per cent (2.1 per cent), which was due to improved credit quality in the portfolio. FIRST HALF OF, JAN UARY JUNE At e, lending to the public increased by 19 per cent to SEK 13,495 million (11,321). Percentage growth was strongest in Denmark, while Sweden and Norway continued to increase the most in absolute terms. ABOUT CONSUMER LOANS In the Consumer Loans segment, Resurs offers unsecured loans to consumers who want to finance investments in their homes, holidays or other consumption. Resurs also provides help in consolidating loans held by consumers with other banks, with the aim of reducing the consumer s interest expense. Resurs currently holds approximately SEK 13.5 billion in outstanding consumer loans LENDING TO THE PUBLIC 13.5 Q2-16 Q2-17 Trend in lending to the public in SEK billion. Operating income increased by 11 per cent to SEK 803 million (724). Operating income less credit losses rose by 9 per cent to SEK 671 million (613). The NBI margin was 12.4 per cent (13.4 per cent). Credit losses in absolute terms were slightly higher year-on-year, and as a percentage of lending volumes were lower year-on-year, at 2.0 per cent (2.1 per cent). PERFORMANCE MEASURES CONSUMER LOANS SEKm Apr Jun Change Change Jan Dec Lending to the public at end of the period 13,495 11,321 19% 13,495 11,321 19% 12,418 Operating income % % 1,492 Operating income less credit losses % % 1,274 NBI margin, % Credit loss ratio, %

9 RESURS HOLDING AB INTERIM REPORT JAN JUN INSURANCE Continued favourable performance and agreement with ya Bank in Norway SECOND QUARTER, APRIL JUNE Insurance s existing partners continued to perform positively in the second quarter and collaborations with new partners were initiated. For example, an agreement was signed with Synsam that will strengthen the segment s Nordic presence. The segment also entered into an agreement with Norwegian company ya Bank in the quarter, which Resurs Bank acquired at the end of The agreement is for the mediation of payment protection insurance and came into effect on 1 July. The deal will represent a significant share of the segment s operations in Norway. The establishment of branches in Norway and Finland was completed during the quarter and were opened on 1 April. The branches were launched to facilitate growth in these markets. Total premiums earned for the segment declined by 22 per cent to SEK 192 million (246). The decline was the result of the discontinuation of the unprofitable travelinsurance programme in the UK. Excluding the UK operations, total premiums earned increased by 6 per cent to SEK 190 million (180). All product lines increased year-onyear. Mainly insurance products in the Motor and Travel business lines continued to performed strongly. In the Product line, bicycles and product insurances in the Norwegian market reported strong growth. Operating income increased 17 per cent to SEK 46 million (39), mainly due to an improved claims ratio of 29.5 per cent (38.7 per cent) and an increase in net income from financial transactions. The technical result amounted to SEK 16 million (16) and was in line with the preceding year. Operating profit increased 9 per cent to SEK 21 million (19) and the combined ratio fell to 92.6 per cent (94.1 per cent). FIRST HALF OF, JANUARY JUNE Premiums earned declined by 18 per cent to SEK 403 million (491). The decline was the result of the discontinuation of the unprofitable travel-insurance programme in the UK. Excluding the UK operations, premiums earned increased by 7 per cent to SEK 391 million (365). ABOUT INSURANCE Non-life insurance is offered within the Insurance segment under the Solid Försäkring brand. The focus is on niche coverage, with the Nordic region as the main market. Insurance products are divided into four business lines: Travel, Security, Motor and Product. The company partners with leading retail chains in various sectors, and has about 2.3 million customers across the Nordic region. PREMIUMS EARNED, NET* Operating income for the period rose 15 per cent to SEK 93 million (81). Net income from financial transactions rose by SEK 7 million year-on-year, while interest income fell by just under SEK 2 million due to the generally weaker interest-rate scenario. The technical result amounted to SEK 31 million (31) and was in line with the preceding year. Operating income increased by 20 per cent to SEK 44 million (36). The total combined ratio improved, declining to 93.0 per cent (94.4 per cent), primarily due to the significant improvement in the claims ratio to 30.8 per cent (37.4 per cent). Q2-16 Q2-17 * Trend in premiums earned, net, in SEKm, excluding the UK operations PERFORMANCE MEASURES INSURANCE SEKm Apr Jun Change Change Jan Dec Premiums earned, net % % 909 Operating income % % 125 Technical result % % 29 Operating profit % % 40 Combined ratio, %

10 RESURS HOLDING AB INTERIM REPORT JAN JUN SIGNIFICANT EVENTS SOME OF RESURS S NEW RETAIL FINANCE PARTNERS IN JANUARY JUNE Digital text message applications - quick and easy for consumers to apply for credit themselves via Resurs Bank In June, Resurs Bank launched digital text message applications that simplify credit purchases for consumers and retailers. The service was launched in Denmark in the second quarter and in Sweden in the summer of. It is scheduled for launch in Norway and Finland in the autumn. Resolution on dividends in Resurs Holding The Annual General Meeting held on 28 April resolved on a dividend of SEK 3.00 per share, representing earnings per share of 66 per cent. The total dividend amounted to SEK 600 million. The Resurs share was traded ex rights from 2 May. The record date was 3 May and the dividend was paid on 8 May. Resurs Bank launched Loyo Pay the first app for mobile payments in both stores and online The test version of Loyo Pay was released in November and the service was fully launched in March. Resurs Bank thus became the first bank to offer its customers a digital payment service that can be used in all sales channels. Resurs Bank issued subordinated Tier 2 bonds of SEK 300 million On 17 January, Resurs Bank issued subordinated Tier 2 bonds of SEK 300 million. These subordinated bonds were issued under Resurs Bank s MTN programme and have a tenor of ten years. There is the option of prematurely redeeming the bonds after five years. AFTER THE END OF THE PERIOD There were no significant events after the end of the period. 10

11 RESURS HOLDING AB INTERIM REPORT JAN JUN OTHER INFORMATION Risk and capital management The Group s ability to manage risks and conduct effective capital planning is fundamental to its ability to be profitable. The business faces various forms of risk including credit risks, market risks, liquidity risks and operational risks. The Board has established operational policies with the aim of balancing the Group s risk taking, and to limit and control risks. All policies are updated as necessary and revised at least once annually. The Board and CEO are ultimately responsible for the Group s risk management. In general, there have been no significant changes regarding risk and capital management during the period. A more detailed description of the bank s risks, liquidity and capital management is presented in Note G2 Liquidity, Note G3 Capital Adequacy, and in the most recent annual report. Information on operations Resurs Holding AB is a financial holding company. Operating activities are conducted in wholly owned subsidiaries Resurs Bank AB, with subsidiaries, and Solid Försäkrings AB. Resurs Bank AB conducts banking operations in the Nordic countries. Operations are primarily consumer-oriented and are licensed by the Swedish Financial Supervisory Authority. Consumer lending is subdivided into retail finance loans, consumer loans, MasterCard and Visa credit cards, and deposits. Retail finance loans are offered to finance both traditional in-store purchases and online purchases. Operations in Finland are conducted through branch office Resurs Bank AB Suomen sivuliike (Helsinki), operations in Denmark through branch office Resurs Bank filial af Resurs Bank (Vallensbæk Strand) and operations in Norway through branch office Resurs Bank AB NUF (Oslo), and also via Resurs Bank s subsidiary ya Bank AS. Solid Försäkring provides non-life insurance products in Sweden, other Nordic countries and, to some extent, in other European countries. Solid Försäkring offers traditional speciality insurance. During the year, Solid Försäkring transferred operations to the branches in Norway and Finland, which commenced on 1 April. Employees There were 742 full-time employees within the Group at e, up 11 since 31 March and up 14 since the end of. The increase was mainly the result of the recruitment of new employees in IT. NUMBER OF EMPLOYEES 742 Capital Market Day Resurs Holding will arrange a Capital Market Day on Monday, 27 November in Stockholm. A formal invitation with a complete programme and information on how to register will be sent out in September. 11

12 RESURS HOLDING AB INTERIM REPORT JAN JUN Information about the Resurs share Resurs Holding s share is listed on Nasdaq Stockholm, Large Cap. The final price paid for the Resurs share at the end of the period was SEK The ten largest shareholders with direct ownership on e were: Share capital Waldakt (fam. Bengtsson) 28.6% Cidron Semper Ltd (Nordic Capital) 26.2% Swedbank Robur Fonder 9.3% Andra AP-fonden 3.2% Handelsbanken Fonder 2.7% Livförsäkringsbolaget Skandia 1.6% AFA Försäkring 1.6% Didner & George Fonder 1.4% Avanza Pension 1.4% Catea Group 1.1% Total 77.1% Financial targets Performance measures Mid-term targets Annual lending growth about 10% 13.9% NBI margin, excl. Insurance about 13-15% 13.1% Credit loss ratio about 2-3% 1.8% C/I before credit losses excl. Insurance and adjusted for nonrecurring costs about 40% 42.4% Common Equity Tier 1 ratio over 12.5% 13.3% Total capital ratio over 14.5% 15.3% Return on tangible equity (RoTE) adjusted for nonrecurring costs 1) Dividend about 30% at least 50% of profit for the year 29.0% n/a 1) Adjusted for Common Equity Tier 1 of 12.5 per cent and dividends deducted from the capital base for the current year. Financial calendar 31 October Interim report for Jan-Sep NEXT REPORT 31 OCTOBER 12

13 RESURS HOLDING AB INTERIM REPORT JAN JUN THE BOARD S ATTESTATION This interim report has not been audited. The Board of Directors and the CEO certify that this interim report provides a fair review of the Group s and the Parent Company s operations, financial position and results and describes the significant risks and uncertainties faced by the Parent Company and Group companies. Helsingborg, 7 August. Kenneth Nilsson, CEO Board of Directors, Jan Samuelson, Chairman of the board Martin Bengtsson Mariana Burenstam Linder Fredrik Carlsson Anders Dahlvig Christian Frick Lars Nordstrand Marita Odélius Engström 13

14 RESURS HOLDING AB INTERIM REPORT JAN JUN SUMMARY FINANCIAL STATEMENTS GROUP Condensed income statement Jan-Dec Note Interest income G5 671, ,073 1,308,498 1,186,757 2,449,066 Interest expense G5-67,324-55, , , ,813 Fee & commission income 58,315 55, , , ,482 Fee & commission expense, banking operations -17,530-12,221-30,918-25,050-49,370 Premium earned, net G6 191, , , , ,204 Insurance compensation, net G7-56,672-95, , , ,584 Fee & commission expense, insurance operations -60,892-87, , , ,775 Net income/expense from financial transactions 4,340 2,254 3,153-2, Profit/loss from participations in Group companies -1,678-1,678-1,678 Other operating income G8 42,135 51,216 83,874 99, ,962 Total operating income 765, ,617 1,514,374 1,386,233 2,796,536 General administrative expenses G9-270, , , ,848-1,081,596 Depreciation, amortisation and impairment of non-current assets -8,727-7,363-17,312-14,667-31,272 Other operating expenses -48,730-40,594-96,361-81, ,454 Total expenses before credit losses -328, , , ,158-1,280,322 Earnings before credit losses 437, , , ,075 1,516,214 Credit losses, net G10-97,787-90, , , ,693 Operating profit/loss 340, , , ,935 1,139,521 Income tax expense -76,867-69, , , ,727 Net profit for the period 263, , , , ,794 Attributable to Resurs Holding AB shareholders 263, , , , ,794 Basic and diluted earnings per share, SEK G Condensed statement of comprehensive income Jan-Dec Net profit for the period 263, , , , ,794 Other comprehensive income that will be reclassified to profit/loss Translation differences for the period, foreign operations -63,276 47,644-87,413 85, ,293 Hedge accounting 17,458 21,018-17,910 Hedge accounting - tax -3,841-4,624 3,940 Comprehensive income for the period 213, , , ,293 1,057,117 Attributable to Resurs Holding AB shareholders 213, , , ,293 1,057,117 14

15 RESURS HOLDING AB INTERIM REPORT JAN JUN Condensed statement of financial position Assets Note Cash and balances at central banks 61,985 53,658 56,173 Treasury and other bills eligible for refinancing 841, , ,068 Lending to credit institutions 3,018,932 3,400,667 3,294,955 Lending to the public G11 22,310,666 19,596,456 21,204,281 Bonds and other interest-bearing securities 1,951,337 1,639,262 1,886,004 Subordinated debt 34,635 23,337 32,491 Shares and participating interests 62,153 37,591 65,858 Intangible assets 1,847,564 1,838,818 1,885,106 Property, plant & equipment 43,390 37,716 42,079 Reinsurers' share in technical provisions 6,250 16,616 7,734 Other assets 190, , ,143 Prepaid expenses and accrued income 227, , ,495 TOTAL ASSETS 30,595,469 27,993,484 29,813, Dec Liabilities, provisions and equity Liabilities and provisions Liabilities to credit institutions 18,476 1,700 Deposits and borrowing from the public 17,981,212 18,388,300 18,617,943 Other liabilities 963,221 1,059,045 1,115,641 Accrued expenses and deferred income 252, , ,811 Technical provisions 415, , ,853 Other provisions 6,494 9,175 6,988 Issued securities 4,698,305 2,202,540 3,316,130 Subordinated debt 340,396 40,324 42,160 Total liabilities and provisions 24,657,534 22,445,545 23,714,226 Equity Share capital 1,000 1,000 1,000 Other paid-in capital 2,088,142 2,073,210 2,088,610 Translation reserve 5,047 9,387 76,066 Retained earnings incl. profit for the period 3,843,746 3,464,342 3,933,485 Total equity 5,937,935 5,547,939 6,099,161 TOTAL LIABILITIES, PROVISIONS AND EQUITY 30,595,469 27,993,484 29,813,387 See Note G12 for information on pledged assets and commitments. 15

16 RESURS HOLDING AB INTERIM REPORT JAN JUN Condensed statement of changes in equity Initial equity at 1 January Owner transactions Share Other paidin capital capital Translation reserve Retained Total equity earnings incl. profit for the period 1,000 2,050,734-76,257 3,028,691 5,004,168 Option premium received 22,477 22,477 Net profit for the period Other comprehensive income for the period Equity at e 435, ,650 85,644 85,644 1,000 2,073,211 9,387 3,464,341 5,547,939 Initial equity at 1 January 1,000 2,050,734-76,257 3,028,691 5,004,168 Owner transactions Unconditional shareholder s contribution 15,000 15,000 Option premium received 22,876 22,876 Net profit for the period 904, ,794 Other comprehensive income for the period 152, ,323 Equity at 31 December 1,000 2,088,610 76,066 3,933,485 6,099,161 Initial equity at 1 January 1,000 2,088,610 76,066 3,933,485 6,099,161 Owner transactions Option premium received/repurchased Dividend paid -600, ,000 Net profit for the period 510, ,261 Other comprehensive income for the period -71,019-71,019 Equity at e 1,000 2,088,142 5,047 3,843,746 5,937,935 All equity is attributable to Parent Company shareholders. 16

17 RESURS HOLDING AB INTERIM REPORT JAN JUN Cash flow statement (indirect method) Jan-Dec Operating profit 661, ,935 1,139,521 - of which, interest received 1,308,561 1,171,024 2,448,835 - of which, interest paid -42,632-28, ,636 Adjustments for non-cash items in operating profit 253, , ,606 Tax paid -243, , ,355 Cash flow from operating activities before changes in operating assets and liabilities 672, ,993 1,310,772 Changes in operating assets and liabilities Lending to the public -1,560,967-1,155,038-2,605,972 Other assets 60,976 84, ,152 Liabilities to credit institutions -1, , ,560 Deposits and borrowing from the public -405,238 1,747,776 1,786,924 Acquisition of investment assets -604, ,571-1,682,620 Divestment of investment assets 552, ,236 1,385,556 Other liabilities -11, , ,206 Cash flow from operating activities -1,298,398 1,007, ,258 Investing activities Acquisition of non-current assets -31,608-11,526-26,640 Divestment of non-current assets 1,017 2,254 3,672 Divestment of subsidiaries - net liquidity impact -2,538-2,538 Cash flow from investing activities -30,591-11,810-25,506 Financing activities Dividend paid -600,000 Unconditional shareholder s contribution received 15,000 Issued securities 1,397,150 1,094,600 Option premium received/repurchased ,476 22,886 Subordinated debt 300,000 Cash flow from financing activities 1,096,682 22,476 1,132,486 Cash flow for the period -232,307 1,017, ,722 Cash & cash equivalents at beginning of the year 3,351,128 2,402,046 2,402,046 Exchange difference -37,904 34,390 55,360 Cash & cash equivalents at end of the period 3,080,917 3,454,325 3,351,128 Adjustment for non-cash items in operating profit Credit losses 200, , ,693 Depreciation and impairment of property, plant & equipment 17,312 14,667 31,272 Profit/loss tangible assets Profit/loss from participations in associated companies 1,678 1,678 Profit/loss on investment assets -22,699-12,872-28,085 Change in provisions -47,873-71,642-73,720 Adjustment to interest paid/received 82,783 64,359 3,483 Currency effects 21,147 13,886 29,331 Other items that do not affect liquidity 2, , , , ,606 Liquid assets are comprised of Lending to credit institutions and Cash and balances at central banks. 17

18 RESURS HOLDING AB INTERIM REPORT JAN JUN NOTES TO THE CONDENSED FINANCIAL STATEMENTS G1. Accounting principles The Group s interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and with applicable provisions of the Swedish Annual Accounts Act for Credit Institutions and Securities Companies and the Swedish Financial Supervisory Authority s regulations and general guidelines on Annual Reports in Credit Institutions and Securities Companies (FFFS 2008:25), as well as the Swedish Financial Reporting Board s recommendation RFR1, Supplementary Accounting Rules for Corporate Groups. The Resurs Group s accounting principles are presented in more detail in the latest annual report. No new IFRS or IFRIC interpretations, effective as from 1 January, have had any material impact on the Group. The Parent Company has prepared its year-end report in accordance with the requirements for year-end reports in the Annual Accounts Act (AAA) and the Swedish Financial Reporting Board's recommendation RFR 2, Accounting for Legal Entities. The same accounting and valuation policies were applied as in the latest annual report. IFRS 9 introduces a new model for calculating the credit loss reserve based on expected credit losses, as opposed to the current model based on credit loss events that have occurred. The impairment model includes a three-stage model based on changes in the credit quality of financial assets. Under this three-stage model, assets are divided into three different categories depending on how credit risk has changed since the asset was initially recognised in the balance sheet. Category 1 encompasses assets for which the credit risk has not increased significantly, category 2 encompasses assets for which the credit risk has increased significantly, while category 3 encompasses defaulted assets. The credit loss provision for assets is governed by the category to which the assets belong. Reserves are made under category 1 for expected credit losses within 12 months, while reserves for category 2 and 3 are made for expected credit losses under the full lifetime of the assets. The Group continued to work intensively on preparing implementation during the first six months of the year. The management believes that it has made significant progress in its work on both developing the underlying calculation models and accompanying structures required for implementing the future accounting standard. Work on developing macrovariables was prioritised in the second quarter. The Group believes that credit loss reserves will increase at the same time as equity will decrease when the new accounting standard is implemented, primarily as a result of assets being included in the calculation of the credit loss reserve without any elevated credit risk. The regulations are also expected to lead to some increased volatility in the credit loss line of the income statement. The effect of the implementation on the capital base cannot be assessed yet since the European Commission s proposal that the effect on the capital base is to be phased in over five years has not yet been adopted. IFRS 9 takes effect on 1 January The interim information on pages 2-33 comprises an integrated component of this financial report. G2. Liquidity - Consolidated situation Liquidity risk includes the risk of not being able to meet liquidity commitments without significantly higher costs.the consolidated situation, comprised of the Parent Company Resurs Holding AB and the Resurs Bank AB Group, must maintain a liquidity reserve and have access to an unutilised liquidity margin in the event of irregular or unexpected liquidity flows. The Group s liquidity risk is managed through policies that specify limits, responsibilities and monitoring and include a contingency plan. The contingency plan includes, among other things, risk indicators and action plans. The Group s liquidity risk is controlled and audited by independent functions. Liquidity is monitored on a daily basis and the main liquidity risk is deemed to arise in the event multiple depositors simultaneously withdraw their deposited funds. An internal model is used to set minimum requirements for the amount of the liquidity reserve, calculated based on deposit volumes, the proportion covered by deposit insurance and relationship to depositors. The model also takes into account the future maturities of issued securities. The Board has stipulated that the liquidity reserve may never fall below SEK 1,200 million. Apart from the liquidity reserve, there is an intraday liquidity requirement of at least 4 per cent of deposits from the public, or a minimum SEK 600 million. There are also other liquidity requirements regulating and controlling the business. Accordingly, assets are segregated, unutilised and of high quality. The liquidity reserve largely comprises assets with the highest credit quality rating. In addition to the liquidity reserve, the consolidated situation has other liquid assets primarily comprised of cash balances with other banks. These assets are of high credit quality and total SEK 3,620 million (3,727) for the consolidated situation. Accordingly, total liquidity amounted to SEK 5,312 million (5,470). Total liquidity corresponded to 29 per cent (30) of deposits from the public. The Group also has unutilised credit facilities of SEK 50 million (550). Liquidity Coverage Ratio (LCR) for the consolidated situation is reported to the authorities on a monthly basis. The LCR shows the ratio between high qualitative assets and net outflow during a 30-day stressed period. As at e, the ratio for the consolidated situation is 183 per cent (149). There has been a minimum statutory LCR ratio of 80 per cent since ; this will increase to 100 per cent by All valuations of interest-bearing securities were made at market values that take into account accrued interest. The liquidity reserve, totalling SEK 1,693 million (1,744), is in accordance with Swedish Financial Supervisory Authority regulations on liquidity risk management (FFFS 2010:7 and applicable amendments thereto) for the consolidated situation. 18

19 RESURS HOLDING AB INTERIM REPORT JAN JUN Financing - Consolidated situation A core component of financing efforts is maintaining a well-diversified financing structure with access to several sources of financing. Access to a number of sources of financing means that it is possible to use the most appropriate source of financing at any particular time. The main type of financing remains deposits from the public. The largest share of deposits is in Sweden, but deposits are also offered in Norway by ya Bank. Deposits, which are analysed on a regular basis, totalled SEK 18,072 million (18,511), SEK 12,719 million (14,022) of which was in Sweden, and the equivalent of SEK 5,353 million (4,489) was in Norway. The lending to the public/deposits from the public ratio for the consolidated situation is 123 per cent (106). Resurs Bank has a funding programme for issuing bonds, the programme amounts to SEK 5 billion. Within the programme, Resurs Bank has been working successfully to issue bonds on a regular basis and sees itself as an established issuer on the market. A total of SEK 2,500 million (400) of senior unsecured bonds (MTN) have been issued within the programme. In Norway, outside the framework of the programme, ya Bank issued NOK 400 million (400) in senior unsecured bonds and subordinated debt NOK 40 million (40). Resurs Bank previously completed a securitisation of loan receivables, a form of structured financing, referred to as Asset Backed Securities (ABS). This took place by transferring loan receivables to Resurs Bank s wholly owned subsidiaries Resurs Consumer Loans 1 Limited. This type of financing was expanded on 21 October, and at e a total of approximately SEK 2.7 billion in loan receivables had been transferred to Resurs Consumer Loans. The acquisition of loan receivables by Resurs Consumer Loans was financed by an international financial institution. Resurs Bank has, for a period of 18 months (revolving period), the right to continue sale of certain additional loan receivables to Resurs Consumer Loans. Resurs Bank and Resurs Consumer Loans have provided security for the assets that form part of the securitisation. At the balance sheet date, the external financing amounted to SEK 2.1 billion (1.4) of the ABS financing. Summary of liquidity Consolidated situation Liquidity reserve as per FFFS 2010:7 definition Securities issued by sovereigns 48,394 73,513 74,412 Securities issued by municipalities 662, , ,086 Lending to credit institutions 78, , ,000 Bonds and other interest-bearing securities 903, , ,458 Summary Liquidity reserve as per FFFS 2010:7 1,692,771 1,743,574 1,739, Dec Other liquidity portfolio Cash and balances at central banks 61,985 53,658 56,173 Lending to credit institutions 2,770,681 3,124,443 2,979,000 Bonds and other interest-bearing securities 786, , ,071 Total other liquidity portfolio 3,619,566 3,726,920 3,827,244 Total liquidity portfolio 5,312,337 5,470,494 5,567,200 Other liquidity-creating measures Unutilised credit facilities 50, , ,700 In evaluating liquid assets for LCR reporting, the following assessment of liquid asset quality is made before each value judgement in accordance with the EU Commission s delegated regulation (EU) 575/2013. Liquid assets, Level 1 1,061,443 1,080,210 1,090,651 Liquid assets, Level 2 565, , ,546 Total liquid assets 1,627,299 1,484,386 1,577, Dec LCR measure 183% 149% 181% Stress tests are carried out on a regular basis to ensure that there is liquidity in place for circumstances that deviate from normal conditions. One recurring stress test is significant outflows of deposits from the public. Additional information on the Group s management of liquidity risks is available in the Group s annual report. 19

20 RESURS HOLDING AB INTERIM REPORT JAN JUN G3. Capital adequacy - Consolidated situation Capital requirements are calculated in accordance with European Parliament and Council Regulation EU 575/2013 (CRR) and Directive 2013/36 EU (CRD IV). The Directive was incorporated via the Swedish Capital Buffers Act (2014:966), and the Swedish Financial Supervisory Authority s (SFSA) regulations regarding prudential requirements and capital buffers (FFFS 2014:12). The capital requirement calculation below comprises the statutory minimum capital requirement for credit risk, credit valuation adjustment risk, market risk and operational risk. The regulatory consolidation (known as consolidated situation ) comprises the Resurs Bank AB Group and its Parent Company Resurs Holding AB. The combined buffer requirement for the consolidated situation comprises a capital conservation buffer requirement and a countercyclical capital buffer requirement. The capital conservation buffer requirement amounts to 2.5 per cent of the risk weighted assets. The countercyclical capital buffer requirement is weighted according to geographical requirements, which amounts to 2 per cent of the risk weighted assets for Swedish exposures and for Norwegian exposures 1.5 per cent of the riskweighted assets. The countercyclical capital buffer requirement will increase to 2 per cent for Norwegian exposures from 31 December. A 3-per cent systemic risk buffer is included in the capital requirement for the Norwegian subsidiary at an individual level, although not in the combined buffer requirement for the consolidated situation. The Group currently does not need to take into account a buffer requirement for its other business areas in Denmark and Finland. The consolidated situation calculates the capital requirement for credit risk, credit valuation adjustment risk, market risk and operational risk. Credit risk is calculated by applying the standardised method under which the asset items of the consolidated situation are weighted and divided between 17 different exposure classes. The total risk-weighted exposure amount is multiplied by 8 per cent to obtain the minimum capital requirement for credit risk. The basic indicator method is used to calculate the capital requirement for operational risk. Under this method, the capital requirement for operational risks is 15 per cent of the income indicator (meaning average operating income for the past three years). Capital base Tier 1 capital Common Equity Tier 1 capital Equity 4,911,349 4,595,935 4,677,988 Net profit for the year 474, , , Dec Less: Foreseeable dividend -300, , ,000 Shares in subsidiaries Intangible assets -1,814,914-1,801,697-1,850,269 Deferred tax asset -4,418-7,932-4,374 Additional value adjustments -2,470-2,084-2,452 Total Common Equity Tier 1 capital 3,264,439 2,986,619 3,124,804 Tier 2 capital Dated subordinated loans 489, , ,325 Total Tier 2 capital 489, , ,325 Total capital base 3,754,279 3,220,262 3,340,129 20